New B.C. port facilities key for exports, Potash Corp. CEO says

Potash Corp. chief executive Bill Doyle expects to see steadily rising worldwide demand for the fertilizer and the need for new export capacity from Western Canada, despite the recent price weakness that has led global producers to cut back on supply.

Western Canadian potash exports should double in the coming decade and, as a result, the industry will need new port facilities in British Columbia, Mr. Doyle said in an interview Tuesday.

In partnership with CN Rail , Canpotex, the marketing arm of Saskatchewan potash producers, has proposed a new export terminal in Prince Rupert, B.C. Mr. Doyle said he expects an investment decision to be made on the $800-million project this year.

Story continues below advertisement

"As we grow from 9.8 million tonnes to 20 million tonnes not too far down the road, we have to have the port facilities and infrastructure to be able to handle that," he said, citing forecast growth for Canpotex, which supplies potash to Asian and other international markets.

Last November, Canpotex submitted the necessary environmental impact statement to the Canadian Environmental Assessment Agency, and has since been meeting with regulatory authorities and first nations to review and address any concerns. The company hopes to have regulatory approvals before the end of the year.

Mr. Doyle expects global demand to revive this spring, after being sluggish in the past two quarters. This winter, producers have cut production to shore up prices, but he expects that restraint will not be necessary by the end of March, when spring planting season begins.

Over the longer term, a growing population and rising incomes will support increase demand for potash, which is a critical fertilizer, and Potash Corp. foresees long-term growth of 3 per cent per annum in consumption.

The company is nearing the end of a 12-year, $7-billion expansion plan that Mr. Doyle said will allow it to capitalize on the growth in consumption in the coming decade.

One challenge for the industry has been increasing competition from new entrants, including BHP Billiton Ltd. , which failed in its 2010 attempt to acquire Potash Corp.; and Vale SA , which has aggressive growth plans for potash production in Brazil.

The cost of building new potash mines is simply too great for many of the proposed projects to go ahead, Mr. Doyle said. Of 62 proposed new projects around the world, no more than a "handful" will be completed, he predicted.

Story continues below advertisement

Story continues below advertisement

"These projects are getting more and more expensive. What we built it for is not what someone else is going to be able to build it for."

In a speech to the Canadian Club of Ottawa, the Saskatoon-based executive defended his battle to keep the company from being acquired by BHP Billiton. He said Potash Corp. shareholders have seen the value of their shares exceed BHP Billiton's offer, despite a weak performance in 2011.

"We are in a little bit of a lull at the moment with global demand in the fourth quarter and first quarter a little bit slow, but that period is coming to an end," he told the audience. "I think we are going to have a very robust last nine months of this year and I think we're going to have some very, very good years ahead of us."

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.